Obama's Dimon in the rough

Jamie Dimon was once the silver-haired hero of Wall Street, scooping up failing banks during the worst of the financial crisis and avoiding the kind of toxic mortgage bonds that sent competitors into bankruptcy and pushed the American economy to the brink.

He was also one of President Barack Obama’s most prominent Wall Street friends, a rare high-profile Democrat in an industry dominated by low-tax, free-market Republicans. Dimon spent several years in Obama’s hometown of Chicago, where he ran Bank One after a nasty breakup with his one-time mentor. He got to know Rahm Emanuel. He hired Bill Daley as a top executive before Daley became Obama’s second chief of staff. He gave hundreds of thousands of dollars in contributions to Democrats.

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Obama returned all the love, at least at first. Dimon made at least 16 trips to the White House and met at least three times with Obama — a bond that allowed the president to appear business-friendly. The New York Times in 2009 called Dimon Obama’s “favorite banker.”

But in the wake of a $2 billion trading loss, Dimon’s reputation as a blunder-free Master of the Universe is badly tarnished. And Dimon’s connection to the president, which the JPMorgan CEO now says was never all that strong, seems gone for good. Dimon has joined the loud chorus of Obama’s Wall Street critics, calling himself a “barely Democrat” who is turned off by what he views as the administration’s anti-business rhetoric and policies.

Obama doesn’t have it that easy. He has to look tough on Wall Street excess without appearing anti-business as he heads into a difficult reelection campaign against Mitt Romney, a highly successful businessman.

The president’s interview with “The View” taped Monday reflects that struggle. JPMorgan “is one of the best-managed banks there is” and Dimon “is one of the smartest bankers we’ve got,” Obama said in the interview that aired Tuesday — the same day Dimon faced shareholders at JPMorgan’s annual meeting in Florida and hung onto his chairman of the board title during the biggest challenge of his tenure.

The Dimon saga serves as a near-perfect miniature of the Obama administration’s fraught relationship with Wall Street and the world of high finance.

Initially, the White House set itself up as a friend to the industry through the continuation of a $700 billion bank bailout with few strings attached. The administration cast itself to deep-pocketed supporters in New York as a bulwark against pitchfork-wielding reformers demanding a dramatic public accounting, re-regulation of the nation’s largest banks and tougher new rules on hedge funds and private equity groups.

Never mind the president’s escalating public rhetoric describing them as “fat cats,” the line to Wall Street executives went. Behind the scenes, administration officials argued, the president was the only one keeping them from the stockades.

But as banking lobbyists and some of their supporters in both parties fought hard against even modest reforms and the Occupy Wall Street movement gained traction, the White House put more distance between itself and the banking industry. Dimon found himself off the guest list at a state dinner, a seeming slight that landed in a New Republic story about the cooling of the Obama-Dimon romance, only to get an invitation eight months later to the next black-tie gala honoring China.